FOLLOW US:

How digital growth can steady the UK’s post-Brexit economy

Published Date
29/08/16 16:27

Jonny Shipp, director of Public Affairs at Telefónica, explores how a digitalisation-first approach can turn today’s challenge into success in the future.

Just six weeks ago, the UK voted to leave the European Union. Through these politically turbulent and fast-moving weeks, a new Prime Minister has been appointed and the UK government has been completely reorganised. The shockwaves of the Brexit decision reverberated across Europe and beyond.

Theresa May says she will make Brexit work. The task must be one of the most challenging faced by any modern government: negotiating with 27 other countries a sensible exit from 43 years worth of hard-won international agreements, in such a way as to improve the long-term growth opportunities for the UK.

The UK’s new Minister of State for Digital and Culture, Matt Hancock, has rightly sought to place digitalisation at the heart of the task. In a recent article he stressed the importance of technology as an inherently disruptive and positive force, an engine of business transformation. He highlights the importance of digital talent and data science in achieving this transformation and wants “to use government to push things further and expand our role as a world-leading digital economy.”

So, why exactly is digital development so important, and why should digitalisation be a top priority for policymakers as they seek to establish Britain’s new place in the world?

Stabilising the economy

Brexit will change the UK economy. In the face of this challenge it is important that policy makers stay true to what we know works. We need to anchor our economy firmly to the pillars of sustainable growth.

I believe that the rapidly evolving digital economy is the most important of these pillars. Economists at Strategy& predict that a 10% increase in the digitalisation of a given economy could add more than 0.5% to growth in per capita GDP, which is forecast to be 1.75% for the UK in 2016. This huge multiplier effect means that supporting the digital economy should be placed front and centre of the UK’s national economic plan.

The UK is well placed to build a highly successful digital economy. Telefónica’s recently launched ‘Index on Digital Life’places the UK as the fourth highest digital performer in the world, scoring 88.7 points out of 100. This report focuses on the key factors that enable economies to derive benefit from their digital infrastructure: people’s trust in digital services, the openness of digital platforms and how favourable the conditions are for digital entrepreneurs.

Fourth in the world is a strong position, but now more than ever the UK is in need of such an advantage. Smart policymaking is now essential in order to leverage this strength and turn the challenge of Brexit into an opportunity for future growth and prosperity. With the right focus, unencumbered by the various agendas of other EU countries and from this strong starting position, the goal must be to establish enviable conditions for digital growth. To win, policymakers must act quickly to establish and execute a strategy that consolidates the UK’s position as Europe’s digital hub.

Driving digital growth

In practice this first of all means investment in infrastructure: broadband and mobile. But, as Telefónica’s report has shown, other factors are also critical. Workers must be up-skilled to ensure that they can contribute to a modern digital economy. International technical, business, creative and research talent must be welcome in the UK. The UK’s research and innovation base is critical, so continued participation in European research programmes must be negotiated, and international researchers must be welcome.

Data flows are also central to digitalisation: complex regulations underpin digital trust and confidence by balancing data privacy, security and freedom of information. The UK data protection regime will need to be internationally compatible, but nonetheless maybe it can be optimised to facilitate and accelerate digitalisation.

Finally, any newfound ability for the UK to set its own rules for digitalisation will amount to nothing without private sector investment. Investors require certainty, which is in short supply. Time is therefore of the essence, to establish the right policies for digital growth in the UK. The Government must build on its past successes in encouraging the digital startup community. These businesses are the future giants of UK industry.

Our digital future

Telefónica’s ‘Index on Digital Life’ places the UK as the strongest digital performer in Europe today, closely followed by Germany and France. Both Germany and France are home to strong tech business hubs and there is a real danger that some UK startups might decide to relocate.

As the UK faces the huge task of shaping and building a new post-Brexit economy, digital competitiveness has never been more critical to its prosperity. To unleash the potential of the digital economy, policymakers should adopt a digitalisation-first approach to turn today’s challenge into a future success. The UK digital sector punches above its weight and is a strong starting point from which to build a prosperous digital future.